#1DROGASIL Droga Raia Raia Drogasil S.A. An Industry Leader with an Unparalleled Combination of Scale, Efficiency and Financial Flexibility#2Disclaimer + This presentation has been prepared for internal use only in order to allow a better market understanding regarding the details of the association between Raia S.A. and Drogasil S.A. ("Transaction"), and was based on assumptions made by the management of Raia and Drogasil, as well as on evidences that make these the most likely scenarios. Future expectations related to this presentation shall consider the risks and uncertainties that involve any activities and transactions, and that are beyond the control of the companies involved in this Transaction (including, but not limited to, political and economic changes, volatility in the exchange and interest rates, technological changes, inflation, financial disintermediation, competitive pressure over products and prices, changes in corporate and tax regulation, and also the approval of the Transaction by Raia and Drogasil's Shareholders' Meetings, and/or by relevant authorities). Therefore, any forward-looking statements or projections contained herein may materially differ from the actual future results of the companies and their businesses. This material is not intended to be the basis for assessing the performance of Raia and/or Drogasil in connection with the Transaction, nor is it intended to contain all the information necessary for such assessment. It does, however, reinforce Raia and Drogasil's strong commitment to transparency and the cementing of close investor relations. This presentation does not substitute or alter any information available in the terms of the current legislation and applicable law. 2#3Presenters + Cláudio Roberto Ely CEO of Raia Drogasil ■ Former CEO of Drogasil S.A. since 1998. Worked previously as the CEO of Banco Geral do Comécio and C. Correa Metais, and as a senior executive for several companies in the Camargo Correa Group. ■ M.S. in Engineering from the Universidade Federal do Rio Grande do Sul Eugênio De Zagottis ■ Former IR & Commercial VP of Droga Raia, with 11 years of industry experience. Worked previously as a consultant for McKinsey and for Arthur Andersen. IR VP-Raia Drogasil ■ MBA from the University of Michigan, BBA from FGV-SP 3#4Raia Drogasil S.A. + ■ " " ■ Merger of equals between Raia S.A. and Drogasil S.A., two leading Brazilian drugstore chains with 181 years of combined history, with shared control by majority shareholders who are members of the founding families; More than 750 stores in 9 states of Brazil, which represent 80% of the Brazilian pharmaceutical market, and a national market share of only 8.7%; R$ 4.5 billion in revenues, R$ 248 MM of EBITDA and R$ 129MM of net income (last twelve months); Differentiated business model with a dual brand strategy, high returns on invested capital, and strong potential synergies and economies of scale to be captured; Strong organic growth & acquisition track record, with a combined net addition of more than 400 stores since 2007, a significant increase over the 331 stores at the end of 2006; ■ Unparalleled combination of scale, efficiency and financial flexibility in the Brazilian drugstore industry. Droga Raia DROGASIL 4#5Proven Growth Track Record Foundations for Growth Accelerated Growth Revenue CAGR: 18,0% IPO (Drogasil) Revenue CAGR: 26.6% + Merger IPO 788* (Raia) 688 582 3,949 515 3,382 409 1,860 2,474 1,595 331 304 291 1,837 267 1,538 1,148 243 228 1,304 831 1,081 894 721 745 645 2,089 673 558 1,788 467 327 370 1,327 1,006 818 346 375 427 523 659 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Gross Revenues Drogasil Gross Revenues Droga Raia * Assumes our gross store opening guidance, disregarding eventual store closings that may happen until the end of the year. Stores LO 5#6Contents of the Presentation 1 Raia Drogasil S.A. - Creating an Industry Leader with an Unparalleled Combination of Scale, Efficiency and Financial Flexibility 2 Fragmented Market, in the Process of Consolidation 3 + Operation supported by two leading brands with strong growth prospects and synergy potential 4 Proven Track Record in Delivering High Growth with Margin Expansion 6#7Largest and Most Profitable Player in the Industry Number of Stores (2010) Stores Gross Revenue (Pro-Forma - 2010) Revenue (R$ million) + EBITDA (Pro-Forma - 2010) EBITDA (R$ million) 1° 1° Raia Drogasil 689 1º Pacheco São Paulo 4,166 Raia Drogasil 219 2º Pacheco São Paulo 682 2° Raia Drogasil 3,949 2º Pacheco São Paulo 166 3º Brazil Pharma1 438 3º Pague Menos 2,235 3º Pague Menos 145 4º Pague Menos 400 4° Brazil Pharma1 1,633 4° Brazil Pharma¹ 84 Source: Companies, ABRAFARMA and Exame Maiores e Melhores 2011 magazine Note: 1 2 According to research reports and the management presentation on Big Ben According to Revista Exame Maiores e Melhores 2011 magazine 7#8Unparalleled Combination of Scale, Efficiency and Financial Flexibility Raia DROGASIL + Raia Drogasil Operational Highlights (Sep/11) High Scale Number of Stores (Sep/11) 384 359 Gross Revenue (R$ millions, LTM¹) 2,187 2,320 Geographic Presence (Sep/11) MG, RJ, SP, PR, SC, RS DF, ES, GO, MG, RJ, SP 8,316 7,962 Number of employees (Sep/11) Sale Area (m2 - Sep/11) 56,766 47,876 743 4,507 SP, RJ, MG, PR, RS, SC, DF, GO, ES 16,278 104,642 High Operating Efficiency Gross Profit 564 (% of Gross Revenue, LTM) 25.8% 593 25.6% 1,157 25.7% EBITDA 106 142 248 (% of Gross Revenue, LTM) 4.8% 6.1% 5.5% Net Income 45 (% of Gross Revenue, LTM) 2.1% 84 3.6% 129 2.9% High Financial Flexibility Equity (Sep/11) 636 634 1,270 Cash and Equivalents (Sep/11) 230.1 170.2 400.2 Net Cash (Sep/11) 151.0 91.5 242.5 8 00#9Controlled by Shareholders who are Members of the Founding Families Raia's Majority Shareholders: 20% Drogasil's Majority Shareholders: 20% Pipponzi Family (13.8%) Pires¹ Galvão² Gávea Pragma Family Family Pipponzi Family Pires¹ Galvão² Gávea Family Family (1.3%) (4.9%) (17.3%) (2.7%) (2.7%) (1.2%) (0.8%) (3.1%) Shares tied to shareholders agreement with lock-up of 10 years Management 40.0% 0.5% Raia Drogasil S.A. Free shares (voting with the shareholders agreement) + 7.8% Free Float 51.7% Joint control by the majority shareholders of both companies, who will always have the same number of shares tied to the shareholders agreement during its whole term (10 years) ▸ Tied shares are subject to a 10-year lock-up, which will be progressively reduced to represent 30% of the current stock capital after the fifth anniversary of the agreement. Note: 1 Carlos Pires Oliveira Dias and Regimar Comercial S.A. 2 Tantra Participações Ltda 9#10Strong Management Team and Corporate Governance Standards + Strong Governance, Aligned Management Incentives • Active Supervisory Committees (Operations, Expansion, Human Resources and Audit) reporting to the Board • Stock-option plan for Senior Executives Qualified Management Team Board Members Name Position Age Past Experience Board Member Years in the Industry Cláudio Roberto Ely CEO 62 Drogasil, Banco Ger. Com, 14 Franco Pipponzi Board Member Grupo C. Correa Eugênio De Zagottis VP Investor Relations 23 41 Droga Raia, McKinsey, 12 123 Name Position Antonio C. Pipponzi Executive Chairman Plinio Musetti Carlos Pires de O. Dias Board Member • Experience Former Chairman and CEO of Raia S.A. (1984-2011), 35 years of industry experience Partner of Pragma Patrimônio and former Chairman of Raia S.A. Former partner of J.P. Morgan Partners ⚫ Former Director and executive of Raia S.A. Former Director of Zambelletti Pharmaceutical Company Former Chairman of Drogasil ⚫ Director of several companies of the Camargo Correa Group Ricardo Castro Azevedo 63 VP - Finance 83 Drogasil, Banco Multiplic 15 Renato Pires de O. Dias Board Member Former Director of Drogasil S.A. Fernando Kozel Varela 41 Droga Raia, 16 VP Operations Paulo Sérgio C. Galvão Board Member Arthur Andersen Droga Raia, Marcello De Zagottis 36 Borders 8 VP-Commercial Bookstores Droga Raia, Rosangela Lutti 56 VP Human Resources Contax, Bunge, Camargo Correa 2 Antonio Carlos de Freitas 61 VP - Retail Drogasil, Unibanco 13 José Paschoal Rossetti Independent Board Member Itamar Correia Silva Independent Board Member Jairo E. Loureiro Independent Board Member • Former Director of Drogasil S.A. Director of Klabin S.A. • Director of Grupo Fleury and Boticário Professor of Fundação Dom Cabral Consultant on Strategy and Governance • Former Director of Raia S.A. Director of J. Macedo, former executive of Natura and Unilever • Director of Planibank Investimentos and of Hypermarcas Former director of Drogasil S.A. 10 10#11Post Merger Integration with Support of Reputable Consulting Companies • Coordination of the activities and of the timetable for the PMI Communication, culture & change management Integration Office • • Synergy mapping and tracking • Advised by McKinsey & Company System Selection • Assessment of the existing IT platforms of Raia and Drogasil • Definition of the systems to be adopted • Advised by McKinsey & Company Definition of the Organizational Structure and Processes • Assessment of the current organizational structures and processes • Definition of the new organizational structure and processes • Advised by McKinsey & Company + Purchasing & Trade Marketing Integration Branding Strategy Compensation Alignment • Alignment of the existing purchasing and trade marketing terms • Definition of a win-win commercial policy to improve our purchasing terms by incentivizing high margin & high performance suppliers • Advised by McKinsey & Company • Assessment of the current brand essences, identities and customer profiles • Definiton of the new brand positioning for Droga Raia & Drogasil • Definition of the the new corporate essence, identity & brand • Advised by Thymus Branding • Assessment of the existing career and compensation programs • Development of a new career program and compensation policy . Realignment of allemployees under the new career program and compensation policy • Advised by the Hay Group Source: Companies 11#12Contents of the Presentation 1 Raia Drogasil S.A. - Creating an Industry Leader with an Unparalleled Combination of Scale, Efficiency and Financial Flexibility 2 Fragmented Market, in the Process of Consolidation 3 + Operation supported by two leading brands with strong growth prospects and synergy potential 4 Proven Track Record in Delivering High Growth with Margin Expansion 12#13Accelerated Pharmaceutical Market Growth (R$ Billion) New Informants Pharmaceutical Market Generics Market (R$ Billion) 19,9% (13,8% vs match basel) 36,2 ୮ 1,8 CAGR 05-09 = 12,0% 34,4 30,2 26,4 23,6 21,5 19,2 CAGR 05-09 = 27.6% 4,5 3,7 2,9 2,3 1,7 37,8% 2005 2006 2007 2008 2009 2010 2005 2006 2007 2008 2009 2010 + 6,2 13#14Favorable Demographic and Macroeconomic Trends Brazilian Population above (Million of people) 60 years old CAGR 00-10 = 3.3% CAGR 10-30 3.8% 13.9 2000 19.3 2010 28.3 + Annual per Capita Pharma Spending Selected Countries Products Losing Patents* 2010 to 2012 (US$ in 2009) 40.5 USA France 655 Japan 635 Germany Argentina 142 Brazil 68 99 2020 2030 % of Total Population Mexico 65 8.1% 10.0% 13.7% 18.7% Source: IMS Health 512 988 50 Molecules Exposed to Generics US$ 500MM Total Demand *Lipitor (Pfizer), Viagra (Pfizer), Diovan (Novartis), Crestor (Astra Zeneca), Atacand (Astra Zeneca), Zyprexa (Lilly), Seroquel (Astra Zeneca), Singulair (MSD), Micardis (Boehringer), Benicar (Sankyo), Aprozide (Sanofi), Aprovel (Sanofi), Others Source: IMS Health, Population Reference Bureau 2009 Source: IMS Health 14#15Fragmented Drugstore Market % of Stores 24,2% Match Base % of Sales + Average Monthly Sales per Store (R$) 450.000 100% 100% 1,9% 1,9% 2,0% 2,1% 2,2% 2,5% 2,8%) 0,7% 0,8% 0,8% 0,9% 1,0% 15,8% 16,4% 16,8% 18,6% 20,2% 400.000 1,2% 1,0% 22,5% 23,0% 1,3% 1,3% 1,2% 95% 0,4% 1,4% 1,4% 0,5% 0,6% 1,4% 350.000 1,2% 4,4% 0,8% 0,9% 5,5% 6,3% 1,1% 80% 6,4% 3,3% 1,1% 4,9% 6,4% 3,5% 5,4% 3,5% 1,9% 5,6% 6,7% 6,6% 300.000 3,7% 2,1% 6,0% 3,7% 2,4% 6,5% 3,7% 8,2% 90% 2,9% 6,9% 6,5% 4,3% 8,6% 3,3% 250.000 9,0% 3,4% 3,3% 10,4% 11,7% 60% 200.000 11,5% 12,4% 80% 4% 0% 150.000 92,5% 92,0% 91,8% 91,1% 90,8% 90,3% 64,8% 62,0% 59,9% 89,3% 100.000 55,7% 40% 51,9% 49,0% (48,3% 4% 50.000 0% 2004 2005 2006 2007 2008 2009 2010 2004 2005 2006 2007 2008 2009 2010 ABRAFARMA TOP 5 Source: IMS Health and Abrafarma ABRAFARMA TOP 6-10 OTHERS ABRAFARMA 2004 2005 2006 2007 2008 2009 2010 SUPERMARKETS OTHER CHAINS INDEPENDENTS 15#16Recent Industry Consolidation Raia Drogasil S.A. (Pro Forma Gross Revenues - 2010) Drogarias DPSP S.A. (Pro Forma Gross Revenues - 2010) 2.089 1.860 3.949 2.323 1.843 4.166 + Brazil Pharma S.A. (Pro Forma Gross Revenues - 2010) 921 712 1.633 Drogasil Raia Raia Drogasil Drogaria São Pacheco Paulo DPSP Br Pharma Big Ben Br Pharma 16#17Accelerated Growth in HPC, with Shifting Share Towards Drugstore Chains + (R$ Billion) HPC Market 21,7 19,6 CAGR 04-09 = 10,7% 13,5 15,4 17,5 Market Share by Channel (% of Weighted Volumes) 12,7% 27,5 6,4% 6,4% 6,0% 5,8% 7,9% 24,9 26,9% 27,7% 27,2% 26,4% 23,6% HPC Growth by Channel - Weighted Volumes Index: 2004 = 100 166,9 9,0% 11,6% 14,2% 15,1% 16,5% 159,1 57,5% 54,3% 52,6% 52,7% 52,0% 116,1 131,1 182,8 212,1 106,2 104,4 106,1 107,0 112,6 99,6 108,7 108,7 100,0 104,9 107,8 104,9 100,9 2004 2005 2006 2007 2008 2009 2010 2004 2004 2006 2008 2009 2010 2005 2006 2007 2008 2009 2010 Supermarkets Drugstore Chains Supermarkets Independent Drugstore Chains Traditional Independent Drugstores & Beauty Drugstores & Beauty Source: ABIHPEC Source: AC Nielsen, Company analysis 17#18Contents of the Presentation 1 Raia Drogasil S.A. - Creating an Industry Leader with an Unparalleled Combination of Scale, Efficiency and Financial Flexibility 2 Fragmented Market, in the Process of Consolidation 3 + Operation supported by two leading brands with strong growth prospects and synergy potential 4 Proven Track Record in Delivering High Growth with Margin Expansion 18#19Leading Brands with Strong Identities and Coordinated Strategies Coordinated brand strategies: differentiation of consumer targets and store formats Raia DROGASIL 106 Years of History ➤ 49th most valuable brand in Brazil¹ Second in number of stores and fourth in revenue 76 Years of History ➤ 35th most valuable brand in Brazil¹ Fifth in number of stores and third in revenue Note: 1 ✓ Maintenance of existing customers who have a preference for a specific brand ✓ Addition of new customers by differentiating the value proposition of the brands Joint survey by ISTOÉ DINHEIRO and BrandAnalytics/Millward Brown, in 2011 + 19#20Strong Geographic Fit with High Growth Potential Geographic Presence (Sep/2011) Market Share by State (Sep/2011) 1 Total: 743 GO: 33 stores 19.4% 9.3% 15.4% 13.5% + DF: 52 stores MG: 57 stores Raia: 24 (BH) Drogasil: 34 (Countryside) 8.7% 8.3% ES: 16 stores RJ: 51 stores 4.1% Raia: 44 Drogasil: 7 10.1% SC: 6 stores 7.4% 6.6% 2.3% 4.9% Raia: 384 Drogasil: 359 SP: 482 stores Raia: 265 Drogasil: 217 PR: 35 stores RS: 10 stores Regions of Operation - Drogasil Regions of Operation - Raia 4.6% 5.1% 4.4% 1.1% 0.9% 0.5% Brazil SP DF GO ES MG PR RJ RS SC DROGASIL ■ Raia I Regions of Operation - Drogasil and Raia ► Presence in states that comprise 78% of the Brazilian pharmaceutical market Established platform to grow into new markets Source: Companies 1 Note: Market share according to IMS Health, for the month of September, 2011 20 20#21Decentralized and Complementary Distribution Structure Distribution Centers 1 ► Drogasil DC in São Paulo (SP) Area: 17,000 m² Aparecida/GO Distribution Center Area of coverage Source: Companies 5 3 41 2 6 23 Drogasil DC in Contagem (MG) Area: 6,200 m² Drogasil DC in Aparecida (GO) Area 12,600 m² + B. Mansa/RJ Contagem/MG São Paulo/SP São Paulo/SP Curitiba/PR 4 5 6 Raia DC in São Paulo (SP) Area: 19,000 m² Raia DC in Curitiba (PR) Area: 6,000 m² Raia DC in Barra Mansa (RJ) – to be opened Area: 8,000 m² 21#22Competitive Gains by Capturing Hard and Soft Synergies + Coordinated growth in existing markets Accelerated entry into new markets Gains from the selective closure of redundant stores ► Adoption of best practices in sales ► Proprietary PBM leveraging the existing corporate and institutional contracts of each company and obtaining new clients ► Sharing of existing product and promotional agreements ► Opportunities to develop a joint e-commerce platform Solid and flexible capital structure Potential use of shares, with enhanced liquidity, as a currency for acquisitions ▸ Experience in acquisitions and post- merger integration ► Leveraging of acquired assets by choosing from two brands in the absorption of each store Optimization of the Store Portfolio Raise the competitiveness Selected Acquisitions of our brands before consumers Efficiency Gains Revenue Growth Gross Margin Increase ► Adoption of the best purchasing conditions and gross margin policies ► Enhancement of trade allowances by applying best practices and revaluing promotional spaces ► Introduction of private label products by leveraging the combined scale Strengthening of the management team and of the combined management structure ► Logistics optimization through complementary DCs and by increasing the shipping density ► Integration of systems and processes, and application of best practices Dilution of corporate expenses and elimination of redundancies 22 24#23Launching our Main Private Label Platform, with Premium Prices & Margins BLU MARINO Um mergulho aromático no azul pluii MARINO 250 ml plant pluii BLU MARINO 250ml pluli DANO 300 ml pluil MARINO 250ml - pluii? VERDE ERVA O movimento do verde + VIBRE GENGIBRE A força da vitalidade BAST pluli 250 ml plull pluil pluii 000m pluii pluii 250m 150ml pluii bum plui VERDE ERVA plull 250m 300ml ssss plui LIMA LIMAO plull LIMA LIMÃO O frescor da cor pluil pluii LIMÃO 250 ml plui UNAO 250 ml BRILHA BAUNILHA O cheiro da sensação pluli BAILHA 250 ml plui 300 pluii8 BRILHA BAUNLHA 150ml pluii BRILHA BAUNCHA 250 ml plull pluii EALNA 250ml pluii AMORA 250 ml C plutt pluii 150 ml pluii 300ml pluii 250ml plui AMORA AMORA ROSA O perfume do brilho 23 23#24Contents of the Presentation 1 Raia Drogasil S.A. - Creating an Industry Leader with an Unparalleled Combination of Scale, Efficiency and Financial Flexibility 2 Fragmented Market, in the Process of Consolidation 3 + Operation supported by two leading brands with strong growth prospects and synergy potential 4 Proven Track Record in Delivering High Growth with Margin Expansion 24 24#25Accelerating Sales Comps 36.7% + - Growth Total Sales Growth -Same Store Growth - Mature Stores 20.9% 19.6% 17.4% 16.8% 14.9% 14.0% 24.9% 8.8% 10.7% 9.4% 7.1% 6.5% 6.4% 15.5% 2009 2010 3Q10 4Q10 1Q11 2Q11 3Q11 2009 2010 3Q10 4Q10 1Q11 2Q11 3Q11 2009 4.0% 3.9% 2.7% 2.0% 7.3% 6.0% 2010 3Q10 4Q10 1Q11 2Q11 3Q11 25#26Delivering High Growth with Margin Expansion + (R$ million) CAGR: 26.3% Gross Revenues Gross Margin (R$ million. % of Gross Revenues) 25.9% CAGR: 19.7% 25.0% 24.9% 23.7% 23.3% 3,949.1 984.9 3,382.3 3,435.6 891.3 2,474.2 2,870.4 788.9 718.5 586.3 2008 2009 (% of Gross Revenues) 9M10 9M11 2010 Operational Expenses 20.3% 19.7% 19.4% 19.2% 18.4% 3.5% 3.8% 3.2% 3.3% 3.3% 2008 2009 2010 9M10 9M11 Adjusted EBITDA (R$ million.as a % of Gross Revenues) 6.0% 5.8% 5.6% 4.9% 4.3% 219.3 105.5 15.9% 16.2% 15.2% 16.0% 16.8% 2008 165.1 199.9 170.9 * 2009 2010 9M10 9M11 2008 2009* 2010 9M10 9M11 26 26 * Adjusted for non-recurring events#27Consistent Earnings Growth Depreciation (R$ million, as a % of Gross Revenues) 1.9% 1.9% 2.0% 1.7% 1.8% 46.3 56.4 73.6 52.1 67.3 2008 2009 2010 9M10 9M11 Net Financial Expenses (R$ million, as a % of Gross Revenues) Net Profit (R$ million, as a % of Gross Revenues) 0.9 13.1 21.5 17.6 + 3.1% 2.3% 2.3% 2.4% 1.7% 107.4 41.1 2008 2009 2010 9M10 9M11 76.2 90.7 69.6 2008 2009 2010 9M10 9M11 (24.2) 27 27